Beware of loan sharks
I think sharks are fascinating to observe from the safety of your home. They’re stealthy, dangerous and fun. But what about the other dangerous predators that share their name? I'm talking about those notorious loan sharks. Just like a shark hunting down its prey, a loan shark looks for the most vulnerable victims in our community and send them down an unending pit of debt and despair.
One woman shared with Fin24 how she had borrowed R6,000.00 from a loan shark to pay for her father’s funeral. She was unemployed, did not have any savings, or a funeral policy, to give her father a dignified funeral She knew a traditional lender wouldn’t help her, so she approached a loan shark.
She gave her ID as collateral, which is common practice in these situations, as is handing over pension cards, bank cards, and cellphones. The Mashonisa, urged the woman to sign documents she didn’t read. Within a few days she had the money to pay for the funeral.
She discovered later, however, that she had signed over her house. In fear of losing her home, and under threat of her loved ones being harmed, she ended up eventually paying ten times what she owed.
There are stories after stories like these in the country. In China, I read that loan sharks force young women to send nude photos as collateral. 😓
With the challenges of our economic climate are bringing them out in full force. Sadly, those who can’t tap into help from friends or relatives are invariably forced to enter into ruinously disadvantageous agreements with loan sharks. These loans are often advertised as a quick fix for your financial troubles and promise to help in the short-term, but they only cause you major stress when it comes to long-term financial well-being.
What will that item finally cost you?
• Illegal lenders usually provide little or no paperwork, such as a contract or a record of repayments. This allows them to cheat.
• They might increase the debt or add additional amounts to it without your permission… and if you have no record, you can’t prove a thing.
• They often refuse to give information, such as the INTEREST RATE or how much you still owe. That way, they get to make the rules up as they go along.
• They may take essential items as security, such as passports, bank cards or your driver’s licence. Obviously, not a great idea!
If you are struggling with debt that is making your consider loan sharks as a option, there are alternatives for borrowing money or overcoming your debt.Turning to family, friends, guaranteed loans, etc, can all be alternatives. The are also companies that offer debt counselling. For more information, visit the Debt Counselling South Africa site or call 081 862 4093.
If worst comes to worst and you really need a loan, always go to an authorised Financial Services Provider, such as your bank. You can try various institutions to compare interest rates and repayment periods. You may still have to repay the loan at a high interest rate, but at least you’ll be protected by the Consumer Credit Act.
It is important to be aware of these tricks and traps before getting a payday loan or an online loan.
With the challenges of our economic climate are bringing them out in full force. Sadly, those who can’t tap into help from friends or relatives are invariably forced to enter into ruinously disadvantageous agreements with loan sharks. These loans are often advertised as a quick fix for your financial troubles and promise to help in the short-term, but they only cause you major stress when it comes to long-term financial well-being.
They may seem helpful, but borrowing from them is never a good idea – even if your credit rating is low or you only need a small amount to tide you over for a month or two.
The government has been trying to crack down on loan sharking. According to the National Credit Regulator (NCR) there were 24.78 million credit-active consumers at the end of June 2017. Close to 10 million of these people had impaired records and could be considered over- indebted.
What will that item finally cost you?
- If you are buying furniture and other items in monthly instalments, you will pay much more for that item than you would if you first saved up the sum you need, before buying it.
- You pay FAR MORE in interest than you would through any legal borrowing.
- You may be THREATENED if you get behind with your repayments. You may even become the victim of violence. You are often BULLIED into borrowing more money to repay one debt with another.
- No matter how desperate you think things are, taking a loan with one of these criminals will only make things worse.
• Illegal lenders usually provide little or no paperwork, such as a contract or a record of repayments. This allows them to cheat.
• They might increase the debt or add additional amounts to it without your permission… and if you have no record, you can’t prove a thing.
• They often refuse to give information, such as the INTEREST RATE or how much you still owe. That way, they get to make the rules up as they go along.
• They may take essential items as security, such as passports, bank cards or your driver’s licence. Obviously, not a great idea!
If you are struggling with debt that is making your consider loan sharks as a option, there are alternatives for borrowing money or overcoming your debt.Turning to family, friends, guaranteed loans, etc, can all be alternatives. The are also companies that offer debt counselling. For more information, visit the Debt Counselling South Africa site or call 081 862 4093.
If worst comes to worst and you really need a loan, always go to an authorised Financial Services Provider, such as your bank. You can try various institutions to compare interest rates and repayment periods. You may still have to repay the loan at a high interest rate, but at least you’ll be protected by the Consumer Credit Act.
It is important to be aware of these tricks and traps before getting a payday loan or an online loan.
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